Does your family wealth, assets and business liabilities sit in the correct ownership structure?

At a recent Private Wealth Network’s Family MasterclassJames Head – Partner of Deloitte Private Tax presented on some of the tax considerations of organising a family’s wealth, assets and business liabilities into the correct ownership structure.

We are in an interesting period for family business. In the past, the next generation was generally the first logical choice in “getting the keys” to a company. These days, many assets get sold before passing into the next generation’s hands, with mergers, trade sales and even IPO’s gaining favour as a choice for realising family wealth.

In our global economy, businesses are expanding faster than ever and stakeholders can be based anywhere in the world. Getting the structure right up front with regular reviews help in creating a smoother transition for the family, whatever happens down the track.

For James, the first step in getting your structure right is understanding what you and the family need and would like to achieve from your assets. The right structure depends on different factors and is tailored based on the families’ unique circumstances. These factors can be subtle differences that can change the structure completely and are very specific to the individual family.

James believes that we need to consider the relevant trade-offs of each structure. For example, asset protection may result in a higher tax cost. Likewise, when investing overseas, securing assets is paramount and it’s important to consider where and how these assets are secured in the relevant jurisdiction.

Another item for consideration is the payment of repatriation of wealth for family members that are non-residents from an income tax perspective, James highlighted that family members living overseas can sometimes create opportunity to consider effective tax planning strategies which must be carefully considered.

Another item of note is the number of wage earning tax payers considering moving overseas for more tax friendly locations. This process is quite complex and tax payers need to consider their residency status from a tax perspective, and consider tax implications upon ceasing residency including deemed disposal of CGT assets. It’s best to understand what it means to relocate first. The ATO and other jurisdictions are very vigilant in testing residency status, and it can come down to the unique circumstances of each taxpayer’s arrangements.

Make sure your family wealth, assets and business liabilities sit in the correct ownership structure


James’ top 6 considerations in getting your structure right:

  1. Are your assets active or passive?
  2. What are the families funding requirements and where are they sourced?
  3. In what jurisdiction(s) will your family conduct investment/business?
  4. What is the scale?
  5. Is your goal profit repatriation or reinvestment?
  6. Where do you and your family want to live?

Written by Melissa Watkins of Deloitte Private

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